Making Tax Efficient Business Decisions
Tax Advice & Planning for SMEs
As a business owner, no matter the size or nature of your business, you will want a finance strategy to minimise the amount of tax you pay, as this will directly impact your business profitability and ultimately your own income. Getting appropriate and timely tax advice and planning as you make decisions for your business throughout the year is critical if you are to make the most of the tax reliefs available to you.
At Equifino we’ve been helping SME and owner managed businesses to plan and make tax efficient decisions for over 20 years. No matter where your business sits within its lifecycle or the challenges it faces, having the support of a specialist tax advisor will ensure that you develop a finance strategy that enables you to minimise the amount of tax payable by both the business and yourself personally.
Tax Considerations
No matter what stage of its lifecycle your business is at, we can provide proactive tax planning support and advice. Whether looking to reduce your yearly tax liability or want advice on the most tax efficient way to exit your business we can provide support tailored to your needs.
Despite the title, tax planning shouldn't be seen as something that is only completed at year end. Throughout the year the tax implications of all business decisions should be considered as part of a holistic tax strategy so that the most tax efficient actions can be taken. It also means that there aren’t any surprises at year end.
Whether considering changes to the way that the business is structured, how staff and Directors are remunerated, or looking to secure funding for growth, each of these decisions should be taken with the taxation implications front of mind.
Tax considerations throughout the year should include how to minimise the following;
- Corporation Tax on the business profits
- Income Tax for Directors receiving dividends
- Capital Gains Tax on any gains from the sale of assets
- VAT charged for goods and services
Whilst exiting your business may not be on the immediate horizon, having an exit strategy in place will enable you to consider the tax implications for you and the business.
Each of the exit strategies available to you will have different tax implications which you should be aware of, so that you can prepare and plan to minimise tax liabilities in the years running up to your exit.
The main tax implication for the owner of the business is Capital Gains Tax (CGT). The timing of the exit, accessing CGT reliefs available or utilising a strategy such as Employee Ownership Trust (EOT) which is free of CGT are all things to take into consideration. If the exit is via an Management Buy Out (MBO) or external sale the tax implications will impact on the way that the deal is structured and will certainly be factored into any agreed sale price.
Negotiating the purchase of another business is going to require significant tax planning. The tax implications for both the buyer and seller can impact the agreed sale price and how the purchase is structured. Similarly with the merger of 2 different businesses the tax position for both businesses will influence the way the merger is structured.
Some of the tax implications to consider include:
- Stamp Duty
- Corporation Tax
- Capital Gains and Income Tax
- VAT
Frequently Asked Questions
We’ve pulled together just a few of the regularly asked questions from our clients about Tax Planning. If you can’t find the answer to your question please get in touch as we’d be happy to help. Alternatively, you can take a look at our Knowledge Hub for more information and resources to help SME businesses.
As with all aspects of your business, in depth planning of both your business and personal tax position will ensure there are no surprises that could adversely impact your cashflow. It also enables you to make informed, tax efficient, decisions about the direction of the business so that you can increase your profits by minimising your tax liabilities.
How you take income from your company will depend on a number of factors including the level of company profits, how much you want to reduce either your own or the company tax bill and whether you want to retain state benefits.
Most directors of limited companies pay themselves in a combination of salary and dividends with, potentially, pension contributions also being made by the company.
All of these will have different tax implications depending on your own and your business circumstances and you should seek advice about the most appropriate way to take income, which may well vary year by year.
There are a number of benefits for your company to make pension contributions on your behalf. These are:
- Pension contributions aren't added to your income and so don't increase your tax bill
- Pension contributions are an allowable business expense, reducing the company Corporation Tax bill
- Employer NIC contributions are not payable on pension contributions again reducing costs for the business.
- They are not limited by the size of your salary but by the annual pension allowance which can increase significantly the amount that can be added to your pension.
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